Suzuki halts sale of CNG-fitted cars

Company runs out of gas cylinders, supply halted for at least two months.

KARACHI: Pak Suzuki Motor Company has stopped bookings for CNG-fitted vehicles that account for more than two-third of its sales, according to the company.

The compressed natural gas (CNG) cylinder inventory has come to an end and supply has been stopped for an indefinite period, said the company’s spokesperson, Shafiq Ahmad Shaikh, on Tuesday.

The local automobile assembler was hit recently as the Oil and Gas Regulatory Authority (Ogra) barred Suzuki’s sole CNG cylinder supplier Faber following an incident in which a cylinder in a car  exploded.

The option of converting the car to CNG after purchase may keep buying interest alive for Suzuki vehicles but lack of company warranty could spook potential buyers, said KASB Securities analyst Muhammad Saqib Sajjad.

The supply should normalise in the coming two months but till then sales of the largest auto assembler will shift down a gear, said InvestCap analyst Abdul Azim.

Market experts have not ruled out the possibility of the government reversing the decision in the near future.

Analysts say that Suzuki has already started testing equipment from other cylinder suppliers for early resumption of supply, however, the company official denied this.

Used car imports to dent local car demand

In another recent dent for the sector, the Economic Coordination Committee of the cabinet relaxed the age limit for used car import to five years from the previous three years. Analysts claim that this decision is in retaliation to a constant increase in prices by local assemblers.

The recent decision can open floodgates to more used car imports that will adversely affect demand in the post-harvest peak season of March to June that generally accounts for 40 per cent of annual vehicle sales, said analyst Muhammad Saqib Sajjad.

Importers have reportedly booked 4,000 units that, if allowed to come into the market, would not only divert three per cent demand from local automakers but also heighten uncertainty over future industry prospects, said Sajjad.

However, this did not stop Suzuki from increasing prices again by Rs11,000 to Rs20,000 for its car models on February 1.

This article has been revised to reflect the following correction:

Correction: February 11, 2011

An earlier version of this article incorrectly stated that Suzuki’s sole CNG cylinder supplier is Landirenzo. Suzuki’s sole CNG cylinder supplier is Faber.

Published in The Express Tribune, February 9^th, 2011.